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Publications | February 1, 2022
3 minute read

Warner Offers Financial Institution Documents in Compliance With PTE 2020-02

In December 2020, the U.S. Department of Labor (DOL) issued a new Prohibited Transaction Exemption (PTE), Improving Investment Advice for Workers & Retirees, also referred to as PTE 2020-02. PTE 2020-02 allows conflicted compensation resulting from “nondiscretionary” fiduciary investment advice, but to obtain the benefit of the exemption, financial institutions and your financial professionals must satisfy the “conditions” in the exemption. These conditions include all of the following:

    Warner Norcross + Judd has designed four documents, branded for your financial institution, to use in documenting compliance with several of the PTE 2020-02’s conditions. You can purchase these documents as a package from Warner for $800. Warner can provide additional customization at hourly rates.

    Instructions when using PTE 2020-02 DocumentsInstructions to assist your financial professional in understanding how to use the forms in connection with PTE 2020-02.
    Rollover and Distribution OptionsThis form is delivered to clients/prospects considering a rollover from a retirement plan. 

    This document can serve as a useful discussion outline with clients/prospects.
    Best Interest Disclosure and Worksheet for Rollover/Transfer RecommendationsThis form provides the retirement investor with the required ERISA Fiduciary Disclosure and the specific reason the rollover is in the retirement investor’s best interest and includes instructions to assist the financial professional in complying with the “impartial conduct standard” when developing a rollover recommendation. Upon request, Warner will customize the form to suit your specific processes or other considerations. This customization will be billed at our current standard hourly rates.

    The financial professional will attest that no misleading statements were provided to the retirement investor and certify that the information (and related documents) described in the Best Interest Disclosure is true, complete and accurate.

    You will provide clients/prospects with a copy of the completed executed form and save the form as part of your books and records.
    “No Recommendation” Acknowledgment for RolloversFor financial institutions that do not wish to provide nondiscretionary rollover recommendations to retirement investors, the No Recommendation Acknowledgment for Rollovers form will record the retirement investor’s acknowledgment that no recommendation was provided by the financial professional.

    Because the DOL believes the retirement investor is likely to understand rollover communications with the financial professional, as at least an implied recommendation, you will need to be able to demonstrate use of compensation and communication practices that ensure no recommendation, express or implied, has been made. Use of this form inherently carries additional risk and you should seek Warner’s advice before using.

    Interested in training? Compliance with PTE 2020-02 requires training your professionals. Contact Warner to learn about our options to train your chief compliance officer and your financial professionals.
    Interested in updating your policies and procedures? Compliance with PTE 2020-02 also requires your design and implementation of PTE 2020-02's retrospective review and officer-certified report. Contact Warner to learn about our options to assist in drafting or reviewing your policies and procedures and conducting an annual retrospective compliance review, as required under PTE 2020-02.